All Forum Posts by: Matt Ward

@Eamonn McElroy is on point and I second pretty much everything he’s mentioned.... sometimes what you think is bad advice from a CPA is actually the right advice that you just don’t like to hear... but Eamonn brings up excellent points that your should be focusing on before 12/31

Originally posted by @Mark Nickoson:

@Jameson Sullivan, I am a small time investor with only three properties.  Over the years I've come to the conclusion that tax incentives is a good way to boost the return of your investments. But like you, I after looking at this tax incentive I concluded it did offer much to small guys like me. 

 For most, it should be looked at like a cherry on top if you are able to make it work... not a reason to force a deal.

Originally posted by @AJ Shepard:

@Jeffrey Holst @@Max Ball

I'm pretty sure there is still some guidance to come on the subject. But one point that I've heard discussed is the 100% improvement or development required is based on the existing structure, not the acquisition cost. Ie when you buy real estate portion is land, portion is improvements. Say you bought a 200k property and depending on where you bought it it may be 150k of land, and 50k of structure (improvements). In the OZ, you'd only need to put an additional 50k in construction improvement to qualify.

There is a little bit of wiggle room when buying real estate to classify in taxes what portion is land and what is structure ( structures are depreciated). But in the OZ it may be beneficial to classify less structure so as to to require less capital improvements.

 Also, my understanding (as it stands now) is that you must "substantially improve" the property by investing an amount over 30 months equal to your un-adjusted basis in the property at the beginning of a 30 month period, and that 30 month period can be over any point of your overall hold period.

This provides the opportunity for significant planning with regard to investor risk and uncertainty.

Also, this is subject to change and simply an interpretation - I could be wrong as there are quite a few moving parts and many more that we are all seeking clarification on. 

@Lien Vuong Actually it’s not just the cap gain portion of your money that can be invested into a QOF, but rather you can invest both your basis and gain amounts and it would be considered a “mixed funds” investment. Only the gain portion of those funds is eligible for the favorable treatment. Tagging some others who know about this as well, but I’m happy to answer questions. Going over this topic with our real estate clients, the two main things that stand out is how favorable this is and when you look at the zoning maps, how many zones there are. @Michael Plaks @Natalie Kolodij @Brandon Hall @Nicholas Aiola

Hi @Matthew Brown thanks for the mention.  Also in the bay is @Jana Cain, and if you are comfortable with out of state professionals, look to @Michael Plaks @Natalie Kolodij and some others on here as well.

Originally posted by @Kelley Phan:

@Matt Ward

Hey Matt, I stumbled over this and I am wondering what is a TIC? What are the pros and cons to this?

@Tony 

@Tony F.

A TIC (tenancy in common) is where you own a fractional percentage of the property and share in the profits and losses in accordance with your ownership %.

Instead of owning a % of an LLC like a syndication you own the property on paper (title, loan, etc). There will propabaly be investor qualifications (accredited or sophisticated) but it's a great alternative that allows folks who want to get out of a participation (hands on) ownership role and 1031 up into a more risk averse large MF building while being hands off.

The sponsor will take fees of course like a normal syndication (most likely) and the returns may be slightly less, but you should still share the appreciation rights and ultimately just continue to 1031 up and up.

Happy to answer questions.  My knowledge is derived from advising clients about these deals and also preparing the tax returns at the sponsor level as well.  I am not an expert.  😃

@Tony F. You’ve probably thought about this but why not 1031 into a TIC? There are large syndication-type companies that will often structure a MF acquisition into a TIC structure for this exact reason. Then you are a paper owner of a % of the building which you can sell at any point, but be hands off while you do own it.

Unless you meet the delayed financing requirements, your use of the cash out refi funds will determine your ability to deduct your interest on that new loan....be careful.

I'm in.  Also adding @Paul Choi @Sherwin Gonzales @Adam Reynolds to see if they can make it.

@Zach Becker I’d recommend using a professional but they don’t need to be in your state. However they should be familiar with both your state and the state that your properties are in. There are several on BP that you could speak with. @Michael Plaks @Natalie Kolodij @Brandon Hall @Nicholas Aiola @Jana Cain